Petroleum Commission Rejects Claims E&P Bill Lacks Transparency

The Petroleum Commission has rejected claims that the Petroleum Exploration and Production (E&P) Bill which is currently in parliament grants the sector minster excessive discretion that could lead to corruption.

According to some sections of the bill, a Petroleum Minister is permitted to undertake direct negotiations under two circumstances on behalf of the nation. First, the minister is allowed to use his or her discretion to determine where an area offered for a public tender does not become subject to a petroleum agreement.

Secondly, the bill allows the minster in consultation with the Petroleum Commission to determine direct negotiations to ensure the most efficient and optimal exploitation of petroleum in a particular area. These provisions drew sharp disagreement from some minority MPs during the second reading, describing the bill as lacking transparency.

But responding to the concerns, the Chief Executive Officer of the Petroleum Commission Theophilus Ahwireng explained to Citi Business News that the provisions are standard practice in the petroleum upstream industry to rather entrench value for money. “People must understand the philosophy behind Ghana’s E&P law. There are certain responsibilities that although are with the commission they are entrusted in the minister,” he said.

He stated for example that the bill enhances transparency by obliging the minster to seek the advice of the commission in approval of the planning of the petroleum area under development. “The beauty of our democracy is that when bills are passed they are subjected to a lot of stakeholder consultation and people make their comments. I think their views are very well informed. It has been discussed and I think the appropriate measures will be taken” he said. He stated that elsewhere; the minister is given all the authority to make the approval.

What the Bill says

The select Committee on Mines and Energy, described the bill as a “significant improvement” over PNDC Law 84, under which licences are currently granted. The committee pointed out for example that the bill will, increase the country’s minimum carried interest in every petroleum agreement from the current 10% to 15%. The bill provides for competitive tendering, which is a different from the current procedure where petroleum rights are granted companies through direct negotiations.

The role of the minister

To check the powers of discretion, the Minister is required to publish the invitation to tender or the invitation for direct negotiations in the Gazette. He is also required to publish it in at least two state owned newspapers and other media for the attention of the general public. Where the Minister receives more than one expression of interests after the publication, a public competitive tendering process would have to be followed.

The report further states that the Minister would be empowered to make Regulations to provide detailed procedures for the grant of Petroleum Agreements, conditions for the competitive tendering process and direct negotiations, safety and security issues.

Minority dissent

However, a Member of the Mines and Energy Committee, Isaac Asiamah is unhappy about these provisions stating that it creates to much space to breed corruption .. “We need to ensure that there is transparency and accountability in the legal regime that ensures that there is fairness in the industry- if it becomes like the old one then it becomes a waste of time,” he said.

He argued that “the bill giving powers to the Minister to negotiate and abrogate agreement is not the best. Discretionary powers given to Minister should be removed and make way for competitive bidding”.

He maintained that “the Minister alone cannot look at the financial capabilities of a company. That is why we have the procurement law, adding that “it should be opened up. If we are not careful all sort of corruption will be going on there because it is about selling our oil blocks”. “Therefore, a Minister may decide that this is a juicy area and I am not going to open it up for competitive tendering- The Minister can invoke the law and give it to the company of his choice. This is a disaster,” he added.